©2024 Humana
LOUISVILLE, Ky.--(BUSINESS WIRE)-- Humana Inc. (NYSE: HUM) today reported consolidated pretax results and net earnings (loss) per share (EPS) for the quarter ended December 31, 2022 (4Q22) versus the quarter ended December 31, 2021 (4Q21) and for the year ended December 31, 2022 (FY 2022) versus the year ended December 31, 2021 (FY 2021) as noted in the tables below.
Consolidated (loss) income before income taxes and equity in net earnings (pretax results) In millions |
4Q22 (a) |
4Q21 (b) |
FY 2022 (c) |
FY 2021 (d) |
||||
Generally Accepted Accounting Principles (GAAP) |
($ 71 |
) |
($60 |
) |
$3,568 |
|
$3,354 |
|
Amortization associated with identifiable intangibles |
20 |
|
17 |
|
81 |
|
65 |
|
Gain on Kindred at Home equity method investment |
— |
|
— |
|
— |
|
(1,129 |
) |
Put/call valuation adjustments associated with company's non-consolidating minority interest investments |
84 |
|
30 |
|
68 |
|
597 |
|
Transaction and integration costs |
35 |
|
35 |
|
105 |
|
128 |
|
Change in fair market value of publicly-traded equity securities |
4 |
|
144 |
|
123 |
|
341 |
|
Charges associated with productivity initiatives related to the previously disclosed $1 billion value creation plan |
188 |
|
— |
|
473 |
|
— |
|
Adjustment (gain) on sale of Kindred at Home's Hospice and Personal Care divisions (KAH Hospice) |
3 |
|
— |
|
(237 |
) |
— |
|
Adjusted (non-GAAP) |
$ 263 |
|
$166 |
|
$4,181 |
|
$3,356 |
|
Net (loss) earnings per share (EPS) |
4Q22 (a) |
4Q21 (b) |
FY 2022 (c) |
FY 2021 (d) |
||||
GAAP |
($0.12 |
) |
($0.11 |
) |
$22.08 |
|
$22.67 |
|
Amortization associated with identifiable intangibles |
0.16 |
|
0.14 |
|
0.64 |
|
0.50 |
|
Gain on Kindred at Home equity method investment |
— |
|
— |
|
— |
|
(8.73 |
) |
Put/call valuation adjustments associated with company's non-consolidating minority interest investments |
0.66 |
|
0.23 |
|
0.53 |
|
4.62 |
|
Transaction and integration costs |
0.28 |
|
0.28 |
|
0.83 |
|
0.99 |
|
Change in fair market value of publicly-traded equity securities |
0.03 |
|
1.11 |
|
0.97 |
|
2.63 |
|
Charges associated with productivity initiatives related to the previously disclosed $1 billion value creation plan |
1.49 |
|
— |
|
3.72 |
|
— |
|
Adjustment (gain) on the sale of KAH Hospice |
0.03 |
|
— |
|
(1.86 |
) |
— |
|
Tax impact of non-GAAP adjustments |
($0.91 |
) |
($0.41 |
) |
($1.67 |
) |
($2.04 |
) |
Adjusted (non-GAAP) |
$1.62 |
|
$1.24 |
|
$25.24 |
|
$20.64 |
|
“Humana is pleased to start the year in a position of strength, with robust 2023 individual Medicare Advantage (MA) membership growth expected to be at least 625,000 for the year, a year-over-year increase of 13.7 percent,” said Bruce D. Broussard, Humana’s President and Chief Executive Officer. "This robust membership outlook reflects high quality growth, with our improvement in retention more than doubling expectations, and marks a continuation of our strong track record of membership growth, with our compounded annual growth from 2018 to 2022 at 10.4 percent as compared to industry growth of 9.7 percent. Humana significantly advanced its strategy in 2022 for continued leadership in integrated value-based care, while delivering 22 percent Adjusted EPS growth. Looking ahead, we are confident in achieving our 2025 Adjusted EPS commitment of $37."
Please refer to the tables above, as well as the consolidated and segment highlight sections in the detailed earnings release for additional discussion of the factors impacting the year-over-comparisons.
In addition, a summary of key consolidated and segment statistics comparing 4Q22 to 4Q21 and FY 2022 to FY 2021 follows the Segment Realignment discussion.
Segment Realignment
During December 2022, Humana realigned certain of its businesses among its previously reportable segments, Retail, Group and Specialty and Healthcare Services, into two distinct segments: Insurance and CenterWell. The Insurance segment includes the businesses that were previously included in the Retail and Group and Specialty segments, as well as the Pharmacy Benefit Manager (PBM) business which was previously included in the Healthcare Services segment. The PBM is included in the Insurance segment as the operations of the business are highly interdependent with the capability needs of the health plan businesses included in the Insurance segment. The CenterWell segment represents the company's payor-agnostic healthcare services offerings, including pharmacy dispensing services, provider services, and home services. In addition to the new segment classifications being utilized to assess performance and allocate resources, Humana believes this simpler structure will create greater collaboration across the Insurance and CenterWell businesses and will accelerate work that is underway to centralize and integrate operations within the organization.
Prior period segment financial information has been recast to conform to the new segment presentation. Please refer to the Segment Realignment Supplementary Information section of the detailed earnings release for the recast information.
In addition to the recast of prior periods to align to the new segmentation, Humana has also provided a view of 4Q22 and FY 2022 results under the previous segment presentation to align with guidance points included as part of the company's third quarter 2022 earnings release dated November 2, 2022. Please refer to the Segment Realignment Supplementary Information section of the detailed earnings release for the recast information.
Humana Inc. Summary of Results
|
4Q22 (a) |
4Q21 (b) |
FY 2022 (c) |
FY 2021 (d) |
||||
CONSOLIDATED |
|
|
|
|
||||
Revenues |
$22,439 |
|
$21,054 |
|
$92,870 |
|
$83,064 |
|
Revenues - Adjusted (non-GAAP) |
$22,443 |
|
$21,198 |
|
$92,993 |
|
$83,405 |
|
Pretax results |
($71 |
) |
($60 |
) |
$3,568 |
|
$3,354 |
|
Pretax results - Adjusted (non-GAAP) |
$263 |
|
$166 |
|
$4,181 |
|
$3,356 |
|
(Net loss per share) EPS |
($0.12 |
) |
($0.11 |
) |
$22.08 |
|
$22.67 |
|
EPS - Adjusted (non-GAAP) |
$1.62 |
|
$1.24 |
|
$25.24 |
|
$20.64 |
|
Benefits expense ratio |
87.3 |
% |
87.9 |
% |
86.3 |
% |
86.7 |
% |
Operating cost ratio |
15.9 |
% |
16.1 |
% |
13.7 |
% |
12.2 |
% |
Operating cost ratio - Adjusted (non-GAAP) |
14.9 |
% |
15.9 |
% |
13.1 |
% |
12.1 |
% |
Operating cash flows |
($5,127 |
) |
($96 |
) |
$4,587 |
|
$2,262 |
|
Operating cash flows - Adjusted (non-GAAP) (e) |
$651 |
|
($96 |
) |
$4,587 |
|
$2,262 |
|
Parent company cash and short term investments |
$934 |
|
$1,334 |
|
|
|
||
Debt-to-total capitalization |
42.0 |
% |
43.7 |
% |
|
|
||
Days in Claims Payable |
45.9 |
|
43.7 |
|
|
|
||
|
|
|
|
|
||||
INSURANCE SEGMENT |
|
|
|
|
||||
Revenues |
$21,599 |
|
$20,137 |
|
$88,841 |
|
$80,930 |
|
Benefits expense ratio |
87.5 |
% |
88.5 |
% |
86.6 |
% |
87.2 |
% |
Operating cost ratio |
12.8 |
% |
12.7 |
% |
10.4 |
% |
10.3 |
% |
Income (loss) from operations |
$46 |
|
($105 |
) |
$3,022 |
|
$2,412 |
|
Income (loss) from operations - Adjusted (non-GAAP) (f) |
$53 |
|
($100 |
) |
$3,052 |
|
$2,433 |
|
|
|
|
|
|
||||
|
|
|
|
|
||||
CENTERWELL SEGMENT |
|
|
|
|
||||
Revenues |
$4,141 |
|
$4,085 |
|
$17,307 |
|
$14,058 |
|
Operating cost ratio |
92.6 |
% |
91.7 |
% |
91.5 |
% |
92.3 |
% |
Income from operations |
$263 |
|
$299 |
|
$1,291 |
|
$938 |
|
Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) (non-GAAP) (g) |
$325 |
|
$337 |
|
$1,488 |
|
$1,206 |
|
|
|
|
|
|
2023 Earnings Guidance
The company provided its GAAP and Adjusted EPS guidance for the year ending December 31, 2023 (FY 2023) as detailed below.
GAAP and Adjusted EPS results for FY 2022 are also shown for comparison.
Diluted earnings per common share |
FY 2023
|
FY 2022 (c) |
||
GAAP |
at least $27.57 |
$22.08 |
|
|
Amortization of identifiable intangibles |
0.55 |
|
0.64 |
|
Put/call valuation adjustments associated with company's non-consolidating minority interest investments |
— |
|
0.53 |
|
Transaction and integration costs |
— |
|
0.83 |
|
Change in fair market value of publicly-traded equity securities |
— |
|
0.97 |
|
Charges associated with productivity initiatives related to the previously disclosed $1 billion value creation plan |
— |
|
3.72 |
|
Net gain on the sale of KAH Hospice |
— |
|
(1.86 |
) |
Tax impact of non-GAAP adjustments |
(0.12 |
) |
(1.67 |
) |
Adjusted (non-GAAP) – FY 2023 projected; FY 2022 reported |
at least $28.00 |
$25.24 |
|
Detailed Press Release
Humana’s full earnings press release including the statistical pages and segment realignment supplementary information has been posted to the company’s Investor Relations site and may be accessed at https://humana.gcs-web.com/ or via a current report on Form 8-K filed by the company with the Securities and Exchange Commission this morning (available at www.sec.gov or on the company’s website).
Conference Call
Humana will host a conference call at 9:00 a.m. Eastern time today to discuss its financial results for the quarter and the company’s expectations for future earnings.
To participate via phone, please register in advance at this link - https://register.vevent.com/register/BI4189468fb19c466d8457e67cf5a59540.
Upon registration, telephone participants will receive a confirmation email detailing how to join the conference call, including the dial-in number and a unique registrant ID that can be used to access the call. A webcast of the 4Q22 earnings call may also be accessed via Humana’s Investor Relations page at humana.com. The company suggests participants for both the conference call and those listening via the web dial in or sign on at least 15 minutes in advance of the call.
For those unable to participate in the live event, the archive will be available in the Historical Webcasts and Presentations section of the Investor Relations page at humana.com, approximately two hours following the live webcast.
Footnotes
The company has included financial measures throughout this earnings release that are not in accordance with GAAP. Management believes that these measures, when presented in conjunction with the comparable GAAP measures, are useful to both management and its investors in analyzing the company’s ongoing business and operating performance. Consequently, management uses these non-GAAP (Adjusted) financial measures as indicators of the company’s business performance, as well as for operational planning and decision making purposes. Non-GAAP (Adjusted) financial measures should be considered in addition to, but not as a substitute for, or superior to, financial measures prepared in accordance with GAAP. All financial measures in this press release are in accordance with GAAP unless otherwise indicated. Please refer to the footnotes for a detailed description of each item adjusted out of GAAP financial measures to arrive at a non-GAAP (Adjusted) financial measure.
(a) 4Q22 Adjusted resultsexclude the following:
Consolidated revenues (in millions) |
4Q22 (a) |
4Q21 (b) |
FY 2022 (c) |
FY 2021 (d) |
||||
GAAP |
$22,439 |
$21,054 |
$92,870 |
$83,064 |
||||
Change in fair market value of publicly-traded equity securities |
|
4 |
|
144 |
|
123 |
|
341 |
Adjusted (non-GAAP) |
$ |
22,443 |
$ |
21,198 |
$ |
92,993 |
$ |
83,405 |
Operating cost ratio Operating costs excluding depreciation and amortization as a percent of revenues excluding investment income |
4Q22 (a) |
4Q21 (b) |
FY 2022 (c) |
FY 2021 (d) |
||||
GAAP |
15.9 |
% |
16.1 |
% |
13.7 |
% |
12.2 |
% |
Transaction and integration costs |
(0.2 |
)% |
(0.2 |
)% |
(0.1 |
)% |
(0.1 |
)% |
Charges associated with productivity initiatives related to the previously disclosed $1 billion value creation plan |
(0.8 |
)% |
— |
% |
(0.5 |
)% |
— |
% |
Adjusted (non-GAAP) |
14.9 |
% |
15.9 |
% |
13.1 |
% |
12.1 |
% |
(b) 4Q21 Adjusted results exclude the following:
c) FY 2022 Adjusted results exclude the following:
d) FY 2021 Adjusted results exclude the following:
(e) Generally, when the first day of a month falls on a weekend of holiday, with the exception of January 1 (New Year's Day), the company receives its monthly Medicare premium payment from CMS on the last business day of the previous month. On a GAAP basis, this can result in certain quarterly cash flows from operations including more or less than three monthly payments. Consequently, when this occurs, the company reports Adjusted cash flows from operations to reflect three payments in each quarter to match the related expenses.
(f) Reconciliation of Insurance segment income (loss) from operations:
Insurance segment income (loss) from operations |
4Q22 |
4Q21 |
FY 2022 |
FY 2021 |
|
Income (loss) from operations |
$46 |
($105 |
) |
$3,022 |
$2,412 |
Amortization associated with identifiable intangibles |
7 |
5 |
|
30 |
21 |
Income (loss) from operations - Adjusted (non-GAAP) |
$53 |
($100 |
) |
$3,052 |
$2,433 |
(g) The CenterWell segment Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) includes the segment's income from operations with adjustments to add back depreciation and amortization expense, interest expense, and income taxes. Adjusted EBITDA includes results from all lines of business within the segment. Adjusted EBITDA also includes the impact of Humana’s minority interest related to the strategic partnership with Welsh, Carson, Anderson & Stowe (WCAS) to develop and operate senior-focused, payor-agnostic, primary care centers, as well as Humana's minority interest ownership of KAH operations based on the timing of previously disclosed transactions.
CenterWell segment Adjusted EBITDA (in millions) |
4Q22 |
4Q21 |
FY 2022 |
FY 2021 |
||||
Income from operations |
$263 |
|
$299 |
|
$1,291 |
|
$938 |
|
Equity in (losses) earnings |
(7 |
) |
(4 |
) |
(22 |
) |
65 |
|
Non-controlling interest income |
— |
|
(1 |
) |
(1 |
) |
(1 |
) |
Depreciation and amortization expense |
47 |
|
43 |
|
186 |
|
165 |
|
Interest and taxes |
22 |
|
— |
|
34 |
|
39 |
|
Adjusted EBITDA (non-GAAP)
|
$325 |
|
$337 |
|
$1,488 |
|
$1,206 |
|
(h) FY 2023 projected Adjusted results exclude the following:
Cautionary Statement
This news release includes forward-looking statements regarding Humana within the meaning of the Private Securities Litigation Reform Act of 1995. When used in investor presentations, press releases, Securities and Exchange Commission (SEC) filings, and in oral statements made by or with the approval of one of Humana’s executive officers, the words or phrases like “expects,” “believes,” “anticipates,” “intends,” “likely will result,” “estimates,” “projects” or variations of such words and similar expressions are intended to identify such forward-looking statements.
These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and assumptions, including, among other things, information set forth in the “Risk Factors” section of the company’s SEC filings, a summary of which includes but is not limited to the following:
In making forward-looking statements, Humana is not undertaking to address or update them in future filings or communications regarding its business or results. In light of these risks, uncertainties, and assumptions, the forward-looking events discussed herein may or may not occur. There also may be other risks that the company is unable to predict at this time. Any of these risks and uncertainties may cause actual results to differ materially from the results discussed in the forward-looking statements.
Humana advises investors to read the following documents as filed by the company with the SEC for further discussion both of the risks it faces and its historical performance:
About Humana
Humana Inc. (NYSE: HUM) is committed to helping our millions of medical and specialty members achieve their best health. Our successful history in care delivery and health plan administration is helping us create a new kind of integrated care with the power to improve health and well-being and lower costs. Our efforts are leading to a better quality of life for people with Medicare, families, individuals, military service personnel, and communities at large.
To accomplish that, we support physicians and other health care professionals as they work to deliver the right care in the right place for their patients, our members. Our range of clinical capabilities, resources and tools – such as in-home care, behavioral health, pharmacy services, data analytics and wellness solutions – combine to produce a simplified experience that makes health care easier to navigate and more effective.
More information regarding Humana is available to investors via the Investor Relations page of the company’s website at humana.com, including copies of:
Lisa Stoner
Humana Investor Relations
(502) 580-2652
e-mail: LStamper@humana.com
Mark Taylor
Humana Corporate Communications
(317) 753-0345
e-mail: MTaylor108@humana.com